Sechin's 'bourbon ban' won't hurt Rosneft, oil traders reckon

LONDON (Reuters) - The international oil business played down U.S. sanctions against the head of Russian energy giant Rosneft on Monday, with traders and global companies forecasting “business as usual”.

Igor Sechin himself responded to being penalized for the Ukraine policies of his friend President Vladimir Putin with sarcasm, calling it “an appreciation of our efficiency”. The firm would go on working with foreign partners.

“So he cannot fly to drink with U.S. energy executives,” one senior Russian oil trader shrugged after Rosneft shares lost 1.7 percent. “But otherwise business will continue.”

Sanctions like the visa ban for the Rosneft CEO might, however, accelerate Russia’s turn to business with China, the trader added: “So he changes from bourbon to Tsingtao beer...”

Senior executives and traders at European energy companies believe the U.S. sanctions do not apply to dealing with Rosneft itself. Measures last month against the Russian co-founder of oil trader Gunvor did not prevent dealing with the firm itself.

One senior trader for a European energy company said it was “business as usual” with Rosneft, while other industry sources said they had not been instructed to stop dealing with Rosneft, which exports more oil than any other Russian company.

Rosneft became the largest publicly listed oil producer last year with a $55 billion acquisition of rival TNK-BP, though the Kremlin controls almost 70 percent of the shares.

BP Plc, which retained a near 20-percent stake in Rosneft as part of the deal for its Russian assets, said it remained committed to its investments in the country.

“We are considering today’s announcement to see specifically what this may mean for BP,” a spokesman for BP in London said, adding the company would comply with any “relevant” sanctions.

“We are committed to our investment in Rosneft, and we intend to remain a successful, long term investor in Russia.”

BP’s shares lost almost 2 percent when sanctions on Sechin were announced, but recovered half of that later in the day.

TIMCHENKO ASSETS

Royal Dutch Shell, which often trades crude oil and refined oil products with Rosneft, said it would respond “appropriately” to ensure compliance with sanctions.

Monday’s sanctions did not include any executives from Russia’s other big state-backed energy firm, Gazprom, the biggest exporter of natural gas to Europe. Like Rosneft, however, Gazprom saw its credit rating downgraded by S&P.

Among the 17 new firms targeted were two that are part-owned by Gunvor co-founder Gennady Timchenko, who was hit last month with personal sanctions. They were his investment vehicle Volga Group and energy transport firm Transoil.

Volga Group, which owns almost a quarter of Novatek, Russia’s biggest independent gas producer, said the sanctions were “political” but had nothing to do with events in Ukraine.

A close ally of Putin for more than two decades, Sechin has served as boss of Rosneft since 2012. It has swallowed up assets to pump an average of 3.85 million barrels per day in the first two months of this year, roughly a third of Russia’s output. U.S. investment bank Morgan Stanley - which agreed in December to sell its merchant oil trading business to Rosneft - said it thought the deal was still proceeding. CFO Ruth Porat told Bloomberg TV she believed it was “on track” for closing in the second half of this year, subject to regulatory approval.

Officials at the bank declined further comment.

Rosneft unit Neftegaz bought a 30-percent stake in 20 deepwater exploration blocks held by Exxon in the U.S. Gulf of Mexico in March 2013. Exxon declined comment when asked if the sanctions would impact their work on the blocks.

Brent crude oil futures, which have risen due to concerns over supplies from Russia, fell by more than $1 to below $109 a barrel after the sanctions were announced.